Govt girds to fight ‘subtle protectionism’

The government is looking to take stern measures under World Trade Organisation against protectionist measures being taken by developed countries in a range of sectors including steel. Officials say protectionism has taken new forms that need to be addressed.

The government is looking to take stern measures under World Trade Organisation against protectionist measures being taken by developed countries in a range of sectors including steel. Officials say protectionism has taken new forms that need to be addressed.

In a letter to the Steel Ministry, Commerce Secretary GK Pillai has sought information on "any policy measure taken by any country that may inhibit or hamper access of Indian exporters to its markets.”

Citing a March 2 World Bank study, Pillai wrote that the measures being taken today are not like the 1930s style protection for safeguards against economic downturns but “have spawned new, murkier forms of protection which discriminate against foreign firms, workers and investors often in subtle ways.” The study estimated a rise of over 22 per cent in US overall trade distorting subsidies at $ 9.9 billion in 2009 over $ 8.1 billion in 2008.

The study pointed that the initiation and imposition of most prevalent form of resriciting imports—anti-dumping duties — increased in 2008 by 15 per cent and 22 per cent respectively over the previous year. While developing countries accounted for the majority of the initiations, it is the developed economies that accounted for the greatest number of impositions, it said.

“Trade is experiencing a sudden, severe and globally synchronised collapse," said Pillai in the letter. "The lines are being blurred between public intervention to contain the impact of the financial crisis on troubled sectors and inappropriate production subsidies to industries whose long-term viability is questionable.”

With exports registering a contuinual fall on a monthly basis this year, the impact of these protectionist measures is likely to hurt exports further.

The Commerce Ministry is expected to convene a policy meeting post the formation of the new government to discuss the issues highlighted by various sectors on this account and to prepare a plan of action accordingly.